Analytics powers anti-money laundering efforts

All banks must balance customer service to an ever-increasing portfolio of risks. That requires financial institutions to have a strategy – and the right technology – to integrate data from their core banking systems and third-party sources to effectively monitor for illicit activity.

For Landsbankinn, finding that balance is crucial for their compliance staff. The bank has 120,000 customers with 39 percent market share in Iceland and is on the list of global systemically important banks (G-SIBs) according to the Financial Stability Board. And like any financial institution, they need to screen transactions for suspicious activity.

“Landsbankinn seeks to fulfill the strictest requirements in regards to money laundering, criminal financing and other illegal activities,” says Thordur Orlygsson, Chief Compliance Officer for Landsbankinn. “And to meet those demands, we need to have a sophisticated and robust solution.”

The company chose SAS® Anti-Money Laundering to identify patterns in its data. Landsbankinn also uses SAS Visual Analytics to provide data visualization capabilities for analysts across the organization.

Reducing false positives

While a vast majority of the transactions that Landsbankinn processes won’t trigger any alerts, a handful may point to suspicious activity. That’s where the company’s compliance team comes in.

“It’s not possible for us to look manually at all transactions,” Orlygsson says. “We need a system like SAS to help us do pattern analysis to identify suspicious transactions to be referred for investigation.”

Before turning to SAS, Landsbankinn had a screening system that flagged about 1,000 false positives transactions each day – positives that the previous system flagged but were not actually illegal or out-of-limits. With a limited number of investigators, lowering that number to focus on truly suspicious claims was a goal.

“We want that number of false positives to be much lower,” says Skuli Jensson, Head of Risk Solutions at Landsbankinn. “And we want that to include as many true positives as possible. Within months, we got that number to 100 to 150 per day. The fewer false positives we get, the more time we can focus on the true positives.”

The company ran tuning exercises with SAS to refine the solution to meet their needs. This effort, combined with a powerful enterprise data warehouse, gave the compliance team the basic components needed to conduct more effective anti-money laundering efforts.

“It’s important to create new scenarios, then adjust them to different situations,” Jensson says. “We can change the parameters of the scenarios so that the bank can flag things more effectively. Our team can run more efficiently, and people who were once sifting through false positives can work on other things.”

SAS’ slogan, ‘The Power to Know,’ is absolutely correct. It has been a vehicle for people who don’t understand the intricacies of data to begin to use it more effectively.Skuli JenssonHead of Risk Solutions

Making information accessible – and visually appealing

Tuning the algorithms that are the core of SAS Anti-Money Laundering is only part of Landsbankinn’s data story. They wanted to share more information throughout the bank, helping more people make data-centric decisions.

The organization uses SAS Visual Analytics to build dashboards and reports that allow non-technical users to access – and gain insights from – critical financial data. This replaces a more manual reporting system, which was based on extracts from data sources into Microsoft Excel spreadsheets. It was a manual and reactive way to report on data.

“I really love SAS Visual Analytics,” Jensson says. “SAS has traditionally been a data company. Then, along comes SAS Visual Analytics, and it’s a total paradigm shift. SAS went from a data company to a company that helps us visualize data.”

SAS Visual Analytics showed a broader audience within the bank how analytics can help them get insight from data that drives the business. Different departments can create reports, and the end users see just what they need to see to do their jobs.

“SAS Visual Analytics has allowed people without data experience to create visually wonderful reports – great reports filled with great data,” Jensson says.

For Landsbankinn – a longtime SAS customer – the combination of anti-money laundering and data visualizations put a new spin on their view of analytics.

“SAS’ slogan, ‘The Power to Know,’ is absolutely correct,” Jensson says. “It has been a vehicle for people who don’t understand the intricacies of data to begin to use it more effectively. They can work more independently from IT, and it makes things faster all around.”

Having a strong partner to help with their data challenges is key for Landsbankinn. The company must stay in tune with the needs of customers and compliance regulations – a complex challenge that becomes more complicated each year.

“We are constantly bombarded with new regulations from the financial authorities,” Jensson says. “The only way we can crunch those numbers and understand that data is through SAS. So our relationship with SAS is only going to grow.”

Challenges

Meet regulatory demands for anti-money laundering safeguards.

Reduce number of false positives flagged by the previous screening system.

Solution

Benefits

Significantly reduced false positives from about 1,000 per day to 100.

Allowed compliance staff to focus more on transactions that require additional investigation.

Provided more visually engaging – and self-service – reports.

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.